The Metaverse is the next big thing. Web 3.0 is the next evolution of the internet.
The first iteration came with Netscape and e-mail. The second iteration came with Facebook and the iPhone. The third iteration is being built on the blockchain and virtual reality.
It is for this reason, Mark Zuckerberg has gone all in, changing the name of his company from Facebook (FB) to Meta. Virtual Reality headsets such as the Oculus Quest, now renamed Meta Quest, and a new headset Metaverse is planning to release next year in 2022 will power the Metaverse.
Furthermore, companies like Square (SQ) are being renamed to Block, with Jack Dorsey transitioning the payments company to a focus on Bitcoin and the Blockchain.
Our Digital Asset expert Jake McCarthy is an expert in Bitcoin, Blockchain, and a plethora of digital assets. He has lived and breathed Bitcoin since 2013, when he made his first trade, and is even teaching an old-timer like me a few new tricks about the fledgling Digital Asset space.
I made a great Metaverse trade in RBLX a few weeks back, you can read about that trade here. But there is one stock I like even more than that. In fact, it’s my favorite Metaverse stock, and that stock is Unity Software Inc. (U).
Here’s Why I think it’s the best stock in the Metaverse space:
Unity Software Inc (U). operates a real-time 3D development platform. Its platform provides software solutions to create, run, and monetize interactive, real-time 2D and 3D content for mobile phones, tablets, PCs, consoles, and augmented and virtual reality devices.
So basically, it’s a computer programming platform that allows developers to design games and software in a 3D design environment without necessarily needing to even learn how to code.
They can “draw” a lot of the objects and interactions in the design software. The 2 most popular VR software developer platforms are Unity (which is the no 1), especially for Indie developers. The other is the Unreal engine, which is owned by Epic games, the private company behind Fortnight.
As companies and Indie developers build out the Metaverse through VR games and software, a lot of them will be doing so using the Unity (U) platform. As the Metaverse and interest in VR increases, I believe so will the number of developers and users of Unity Software (U). This could lead to significant revenue growth for years to come.
Here is a graph of the current Revenue growth for Unity (U).
Red Line indicates Revenue growth, Yellow EBITDA and top is the price chart
From the graph above, we can see as U invests in growth, its EBITDA is falling. However, its year-over-year (YoY) growth for the September ’21 quarter was $286.33m compared to $200.78 for ’20, that’s 42.6% YoY growth. And with the added interest in VR and building out the Metaverse, I expect this type of growth to continue for a long time to come.
Unity (U) is already down over 30% from the highs made just a few weeks ago. As high growth stocks have been taken to the woodshed recently, U is coming into more reasonably priced levels from a fundamental standpoint. Now I am not one to try to catch a falling knife, especially with how bearish I am on the market at the moment. However, I will be watching for U to form a base, where I will be able to take a good Risk/Reward setup.
Right now, U is coming into a previous consolidation area from January so I expect some consolidation around the $140 level where U is trading at now. However, I would not be surprised to see it trade much lower if market volatility and this selloff continues. However, this is undoubtedly my favorite Metaverse stock, and I am eagerly awaiting for the technicals to line up for an entry!
As companies like Facebook, now known as Meta invest Tens of Billions into building out the Metaverse, I expect companies in this ecosystem to see significant growth.
One of the companies I expect to benefit the most is Unity Software Inc (U). This market-leading software development platform is what companies and indie developers are choosing to develop VR software and games.
As the adoption rate for VR and Metaverse continues across the globe, I expect the revenue and stock price of U to grow significantly moving forward. I am actively watching the stock to form a base, so I have a technical setup to enter the trade!